For Income Tax on Trading Income there are certain documents that need to be furnished and prepared. To file accurately, it is important to report all the information. The Income Tax Return comprises of – taxpayer details, Salary Income, House Property Income, Business and Profession Income, Income from Capital Gains, Income from Other Sources, Deductions under chapter VI-A, Foreign Income and Foreign Assets, TDS & TCS details, details of Advance Tax and Self-Assessment Tax, etc. A trader should be ready with all documents before starting the process to file the ITR on the Income Tax e-Filing portal; for example income proofs, investment proofs, identity proofs, etc.
The Documents required to file ITR for a Trader
Basic Documents Required to File ITR for a Trader
- PAN or Details as per PAN – PAN Number, Name, Date of Birth, and Father’s Name.
- Aadhar or Details as per Aadhar – Aadhar Number, Address with PIN code.
- Form 26AS – It is the Tax Credit Statement with details of TDS, TCS, self-assessment tax, income tax refund, high-value transactions, purchase and sale of immovable property, etc. You can also download it from your account on the income tax e-filing website: Guide to download Form 26AS.
- Bank Statements for the Financial Year.
- Trading Statements from all brokerage houses (eg: Tax P&L Report from Broker or Consolidated Investment Portfolio). They comprise of details of trading transactions for different segments for example Equity, Currency, Commodity, Mutual Funds, etc.
- ITR Form (not ITR-V) of previous Financial Year. It reflects the details of carrying forward losses in the previous financial year. You can download it from your account on the income tax e-filing website: Guide to download ITR Form.
- Form 16 received from all employers for the relevant assessment year.
- Pension Statements in case of pension income.
House Property Income
- Address of the property.
- Name and PAN of Tenant.
- Co-owner details in case the property is co-owned.
- In case of property loan – Interest Certificate and Repayment certificate from the bank.
- Challan of Municipal taxes paid on the property if any.
- Rent receipts in case the house property is rented out.
- Sale of Land or Building – sale deed, stamp duty valuation, details of improvement costs.
- Securities’ sale – trading statement, holding statement as on 31st March and FMV (Fair Market Value) as on 31st January 2018.
- Sale of other capital assets – the cost of purchase, cost of improvement & sales receipts.
- Details of expenses incurred on the transfer of Capital Assets.
- Capital gains deposit account details if any.
Business & Profession Income
- Business Income:
- Nature of business or profession.
- Details & proofs of business expenses.
- Presumptive Income:
- Nature of business or profession.
- Gross receipts from Business (44AD) or Profession (44ADA).
- Savings Account Bank Statement.
- Savings Interest Certificate.
- FD Interest Certificate.
- Interest on Income Tax Refund.
- Interest certificates for deposits / bonds /NSC / PPF.
- Dividend warrants or counterfoils.
- Dividend received from foreign companies.
- Rent agreement in case of let out machinery.
- Details about receipts of any other income.
Foreign Income & Assets
- Details of foreign income and taxes deducted on the same
- Details of Assets held outside India including the foreign Bank Accounts
- PPF account statement.
- Fixed deposit certificates/statements.
- Mutual fund NAV statements.
- ELSS / ULIP / NSC investment details.
- Life insurance premium receipts.
- Medical insurance premium receipts.
- Preventive health checkup details.
- Medical expenditure receipts in case of Senior Citizens.
- Pension fund / National pension scheme statement.
- House property loan interest certificate & repayment statement.
- Education loan interest certificate & repayment statement.
- Tuition fees paid.
- Donation receipts.
- Certificate from specified medical authorities in case of disability.
- Proofs of any other tax saving investment or contributions.
No. There is no need to submit any proofs or supporting documents to the income tax department while e-filing income tax return. No document is required to be attached to ITR-V when you send it to CPC, Bangalore. However, you should not report any incorrect information in the Income Tax Return. You may have to submit the proofs and documents if your ITR is selected for scrutiny and the Assessing Officer asks for it.
The Income Tax Act does not specifically mention the time period for which documents must be kept by the taxpayer. However, it does specify the time limit within which the income tax department can issue a notice i.e. 7 years from the end of the financial year. Thus, the taxpayer should keep the financial documents and proofs for 7 years after filing the ITR.
An audit is required if you have a business income and if your business turnover is more than Rs 1 crore for a financial year. In the case of digital transactions (equity transactions are 100% digital), this turnover limit is Rs 2 crores. For equity traders, an audit is also required as per section 44AD in cases where turnover is less than Rs.2 Crores but profits are lesser than 6% of the turnover and total income is above minimum exemption limit.